Reference no: EM132746486

Question: As a result of taking a physical inventory count on december 31, 2016 the cookie company inventory was determined to be $425,000. the auditors for cookie suspected an inventory shortage and used the gross profit method to estimate the ending inventory. the accounting records for the company contained the following information: inventory (1/1/16) $ 330,000 purchases (2016) $1,770,000 sales (2016) $2,200,000 sales returns (2016) 100,000 gross profit ratio 25% of sales ?using the gross profit method, what did the auditors estimate as the amount of the inventory shortage at december 31, 2016?